Gold edged higher on Friday as the
dollar weakened, but the metal was still on track for a small
weekly loss as investors weighed signals from the Federal
Reserve on interest rates.
Spot gold rose 0.2 per cent to $4,177.82 per ounce by 0433
GMT, but was down 0.5 per cent so far in the week. US gold futures
for December delivery climbed 0.7 per cent to $4,199.10.
“Gold has been trapped in a range of $4,221, with the bottom
of the range at $4,075 being met earlier this week,” said Kelvin
Wong, a senior market analyst at OANDA.
“Inflationary trends still remain hot as the core CPI data
and core PPI data for September are hitting beyond
expectations.”
The US dollar headed for its first weekly fall in five
weeks, making greenback-priced bullion more affordable for
buyers overseas.
US producer prices increased by the most in 4-1/2 years last
month amid rising costs for goods and services, in the latest
sign that inflationary pressures are broadening beyond
energy-related products.
The data followed Wednesday’s consumer price report, which
showed prices accelerated in September on a surge in gasoline
costs.
Traders are pricing in a 28 per cent probability of a rate hike
later this month and 89 per cent chance of an increase in December,
according to CME’s FedWatch Tool.
Chicago Fed President Austan Goolsbee said this week’s
stronger-than-expected inflation data had been “discouraging,”
while Fed Bank of Cleveland President Beth Hammack said the Fed
might need to hike rates more aggressively if there were a
notable deterioration in the public’s inflation expectations.
While gold is considered a hedge against inflation, higher
interest rates reduce the appeal of the non-yielding asset.
In India, several large mutual funds issued public notices
late on Thursday suspending bulk subscriptions to gold
exchange-traded funds, just ahead of the festive season when
investor demand typically rises.
Among other metals, spot silver rose 0.7 per cent to $57.81
per ounce, platinum gained 1.1 per cent to $1,642.75 and
palladium climbed 1.5 per cent to $1,143.46. However, all three
metals headed for weekly losses.